Estate planning plays a vital role in protecting your loved ones and your legacy. Unfortunately, common estate planning myths can push people down the wrong path when it comes to protecting their wishes and their family.
Myth: Not everyone needs an estate plan
One of the biggest myths surrounding estate planning is who needs to have an estate plan. Despite popular belief, everyone should have an estate plan, not just wealthy individuals and families. Why? Because failing to have an estate plan in place leaves your wishes unknown and can create challenges for distributing your estate.
Everyone benefits from having an estate plan. This is especially true if you have any minor children or own any property. You should have an estate plan regardless of your age or marital status because it will make sure your children are protected and your assets are distributed according to your wishes.
Myth: Your estate plan only addresses your assets
Another common myth: Estate planning is only for distributing your assets once you die. This is not the only benefit of having an estate plan. Your estate can protect your legacy by creating a plan for charitable giving, gifting and leaving inheritance to loved ones. Your estate can also address what to do in the event you become incapacitated, such as the care you would like to receive and who will be responsible for managing your estate.
Myth: You only need a will
Another myth is that your will can address everything in your estate. This is not true and is not the best option to protect yourself, your family and your assets in some cases. Do not forget about your retirement accounts, insurance policies and other accounts that will pay someone when you die regardless of who you have listed in your will. You need to review all beneficiaries listed on your financial accounts to make sure the right person will receive your assets. In addition to reviewing your accounts, you may want to consider setting up a power of attorney and trust. A power of attorney allows you to name someone to make legal or financial decisions.
Myth: You do not need to revise your estate plan
Another common myth is that you do not need to revise your estate plan. Failure to review and update your estate plan may result in serious consequences for you and your family. It is important to update your estate plan as your life changes. This includes after family members join or leave your family (marriage, divorce, death or birth).
Recognizing and taking action to address these common myths will go a long way in helping you protect your estate. Your estate plan may not seem like a big deal, but it's more important than many realize. Do not wait to review and update your estate plan as necessary before it's too late.